Illinois hospitality exec predicts minimum-wage hike will have a crippling trickle-down effect
Illinois Hotel & Lodging President Michael Jacobsen fears the effects of the recently passed minimum wage increase will have swift and lasting consequences across Illinois and the hospitality industry.
“The general sentiment among hotel operators throughout the state is that the higher costs from this legislation will be charged to customers,” Jacobsen told Prairie State Wire. “The fear from that is room rates will rise by up to 50 percent and that will move visitors and tourists to select other states. It’s not just the amount for the room that will be rising, all other vendors will be raising their rates as this trickle-down effect kicks in.”
Jacobsen said he’s in complete agreement with the findings of a recent Harri workplace study that concludes the $15-an-hour minimum wage hike will mean higher prices for customers and fewer hours for workers as businesses struggle to balance costlier obligations with still making a profit. In all, the workplace management software company surveyed 173 restaurants over a two-week period, fine dining and fast food establishments among them.
Jacobsen said the changes could not come at a worse time for the local hotel industry.
“First and foremost, the higher room rate is in an already increasingly competitive market,” he said. “We’re also seeing acceleration toward automation in technology. Right now, you have the ability to register for a room by cell phone. That’s more by convenience, but as rates rise it will become more of a necessity. Unfortunately, that will cost workers, hours and jobs.”
While proponents of the legislation argue that it stands to stimulate the economy and reduce the income inequality gap, Jacobsen predicts that it will have crippling effects on the economy as a whole.
“You will see the price of things go up almost across the board,” he said.